The political economy of technological change and China’s path of innovation

Abstract Technological competition is a crucial dimension of inter-state rivalry. Against the backdrop of Sino-U.S. strategic competition, technology has undeniably emerged as a central focus in political economy research. Drawing on three recently published books on the political economy of technological change, this article explores the reciprocal relationship between technological development and both international and domestic politics. It examines the different stages of technological change and the political economy forces that shape its dynamics. This study argues that state capacity, market scale, and inclusive institutions constitute the three core determinants of technological innovation, diffusion, and embeddedness, respectively. To illustrate these dynamics, the essay analyzes China’s innovation trajectory, using its technological development as a unique experimental ground for the political economy theories of technological change. Finally, the article calls for bridging the gap between international and domestic factors and underscores the significance of exploring variations in centralized and decentralized institutional arrangements as promising directions for future research.